Carbon pricing

Yet, if we take the industry’s consensus
view that emissions will costs around $40 per
tonne, and assume that any such levy will be tax
deductible, it only causes a downside revision of
eight per cent, based on the ten-year net present
value.

Statoil is the least vulnerable, having
already been subject to Norway’s carbon tax
regime, while Exxon is the most vulnerable. Of
course, this rough-and-ready analysis overlooks
the propensity of different oil-producing regions
to tax producers. For example, is it realistic to
assume that Saudi Arabia will be as likely to
introduce a tax on carbon as, say, the UK? The
risk is almost certainly not the same.

Factoring in jurisdiction risk halves the impact to around four
per cent, refecting the bias of most companies’
activities towards lower-risk West African
countries and, most particularly, the Middle East.